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tv   Street Signs  CNBC  May 1, 2012 2:00pm-3:00pm EDT

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that's not the question. is it fit? i think you can come in here at this level and feather in. at the end of the day he has provided leadership. she has a great track record. >> jeff, thanks very much. that'll do it for "power lunch." >> see you back at the ranch. "street signs" begins right now. have a great afternoon. and welcome to "street signs," everybody. i am mandy drury. brian will be along in just a moment's time from sunny california. lucky him. a fat tuesday for your money. the dow is at a four-year high today. full plate of winners to tell you about from food to housing to credit cards and beyond. why are the bulls breaking out? a trifecta of money managers are set to tell us. also, the bond king bill gross is also ready to weigh in on the rally. you might be surprised to find out where he is telling investors to stash their cash. plus, rim. the number one pick in our stock draft down big today as
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blackberry world is starting. could this be the mother of all comebacks? good question. speaking of comebacks, why stainless steel is so five minutes ago. first, what a rally today. stocks are on the back of a stronger than expected ism report this morning. which basically said manufacturing grew at a faster pace. dow is now at a four-year high. s&p meantime up about 1% with all ten large caps s&p 500 sectors moving to the upside. over on the nasdaq, intel, c gate and the mothership of cnbc, comcast all at new highs. what's going on with sears? 18% up. it has doubled this year. why don't we get down to the floors. we've got bob and we've got rick. bob, let's start with you. after we got the better than expected number on the ism this morning, to what extent does that now set the bar higher for both the payrolls on friday and ism services on thursday? >> it does set it a little bit higher. i'll tell you why they're a little bit more optimistic.
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new orders were particularly strong in this report. that's very good for the overall economy. very good for bottom line earnings growth for manufacturers. number two, employment was particularly strong. now, remember the jobs report last month was kind of disappointing. 120,000. in particular, employment growth in manufacturing was disappointing. when they come out and say, hey, we're doing a little bit better on employment in the manufacturing area today, everybody says, aha. maybe that'll read through to the employment numbers on friday. >> you can certainly see the relief in the market, can't you? a quick segue over to rick santelli. we've got the bond king bill gross on in just a second. what would you ask him, rick? >> what would i ask him? i would say, how are the large bond funds and major wall street players dealing with the fed and accommodation? my guess is his answer would be they're making a few bucks. >> mm-hmm. >> i think they're one of the groups that benefit. i don't think that's necessarily a bad thing. bill gross is in business to make money. my guess is he has a big
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presence in the mortgage arena. i think the fed and the government continue to look at ways to affect the mortgage arena. and to drill a little deeper on bob, you know, the regional manufacturing indices do not reflect the strength of national. if you look at the employment index, and he's right, there was improvement on the national. but the national never got walloped the way chicago did from february to march. so it really predicted the weak jobs number at 120,000 better than the national number did. >> rick and bob, thank you very much for that. of course, bill gross will be with us in just a minute. in the meantime, why don't we take a look at shares of herbalife getting really crushed today after short seller david einhorn questioned some of the company's disclosures. we've got herb greenberg. he's been doing a lot of reporting on herbalife on the cnbc news line. what do you make of this, herb? >> mandy, i think it's kind of interesting. he's asking some interesting questions. the most important of those questions is where, you know, is
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how much of the product goes to outside consumers. and that's a very important question with a multilevel marketing company. >> you know, what i want to ask you, though. i saw a note out from d.a. davidson saying basically with this drop in mesh herbalife today, if anyone else had asked questions like that there wouldn't be so much of a fuss. what do you make of that? >> when you look at the company from the numbers, it looks like it's a really strong and fast growing company. but i think the question is, is how are they getting those numbers? and, you know, look. if you go to the company's website, there's a question. are we an illegal pyramid scheme? no. that would be illegal. that question is something certainly the company has been asked before. the bottom line of that is how much of the product is actually sold to customers versus how
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much is this a business that's in the business of merely recruiting other people to become distributors. >> absolutely. we really need to know how valuable that information on distributors is to investors. herb, i know you'll keep on following that story. thanks for phoning in. back to stocks. stiting at a fresh four-year high today. where do we go from here? which sectors have the most potential to pob? joining inin ining -- great to the show today. don, you're sitting next to me. you go first. what do you reckon? next six months we going to go up? we going to go down? we going to sit where we are? >> i think we've got a really great fundamental rally based on really strong earnings and revenue growth. our belief is that the u.s. economy is a lot stronger than most people understand. we had governments shedding jobs. we think that the fundamentals are in favor of a continued rally. on top of that, though, we've got the euro risk.
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you know, with sovereign debt and concerns. another potential fear-based flight to quality, you know, the u.s. treasury like we did last summer. so that may impinge upon the market rallying higher. but we see the fundamentals supporting a strong rally higher. the markets are probably 10% to 15% still undervamed here. >> okay. you think they're 10% to 15% understand valued. if i'm not wrong, charlie, you think where we are right now for the s&p which is at 1411, we're above fair value. >> yeah, i think we're right just above fair value at this point. 11 points or so. it's primarily because we believe that profit margins really don't have a whole lot of chance to go higher from here. we're looking at 50-year highs in terms of net margins for the s&p. while the numbers have been good here in the first quarter, the estimates have been ratcheted down. we look for $100 from the s&p earnings this year. 14 multiple i think is reasonable. we could see a multiple maybe a point or two higher at the most.
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but we're not expecting it. we think we pretty much had a good year already this year in the first four months. >> we have had a good year. nonetheless, if you have some money what are you going to do with it, charlie? where would you put it if you wanted to make a buck? >> the upside really comes from the big industrial cyclicals. names like boeing and honeywell particularly in the sub markets that are still strong like aerospace and companies that have very big backlogs. worldwide air traffic continues to grow at very nice rates. grew even throughout the recession. we think some of the big cyclic ams, industrial cyclicals in energy and aerospace have some further room to run. >> don, you've come along with a few picks as well. >> yeah. we like stocks that have really good earnings momentum that are showing good value relative to their price. we have rpc, an oil services company that has a 3.1% dividend. dividends are key. we think we're in the golden age of dividend investing. companies are going to continue to drive dividends higher. >> even with potential changes in dividend tax laws?
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>> i think so. i think that companies are cash rich right now. they have to give the money back to shareholders long term. csx, which is benefiting from the boom in transportation on the railroad side. and we also have teva pharmaceutical on the generic side. a very large generic in the 2% plus dividend range. great earnings momentum in that space. so we like stocks that are good values with dividends. >> okay. you've got these three companies you mentioned rpc, csx and teva. how long do we hold them for? short term play? long term play? medium term play? >> every time we buy a stock we recommend investors have some risk management under it. we manage with a dynamic stop loss program. so we think that it's important not to just, you know, fall asleep owning any stock ever. >> ever. absolutely. bottom line it with us, charlie. what's the wild card here for the markets? >> well, i think one of them's coming up next month with the announcement by the supreme court on obamacare. i think that, you know, it's
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one-sixth of the economy would have -- the decision either way is going to have implications for the election. that's what we're going to be watching over the next 30 days. >> don and charlie, thank you very much for joining us. talk about footing the bill. shoe maker wolverine worldwide will pay $1.2 billion to buy collective brands. the company that owns pay less shoes, keds, stride rite and other popular shoe brands. congratulations on the deal. great of you to join us today, blake. why does this make sense for you? >> we've been looking at these brands for some time. it's a perfect fit with our company. we now operate -- distribute our footwear in about 190 countries around the world. 12 different brands. the four brands of the performance and lifestyle group of collective brands were perfect. sperry's. saucony. stride rite. keds. >> you still need to get
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approval from shareholders, i understand. also antitrust clearance. are you confident that will come through? >> yeah. at this point, we're being told that's going to be routine. and we're expecting those approvals within the next 30 to 45 days. >> okay. >> then we'll close shortly thereafter. >> okay. so i understand that there's going to be minimal 2012 eps impact. you expect that to kick in to what extent next year? >> next year we expect eps achretien from this transaction from 25 cents to 40 cents a share. and from 50 cents to 70 cents a share in 2014. acretive acquisition for us our first full fiscal year. >> to what extent are acquisitions your growth strategy? i'm getting at, what's going to be the next step that you take, blake? >> well, it's -- we've got a -- this will provide us with a tremendous portfolio of 16 brands. so we've got tremendous growth
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opportunities across these brands. the four brands that we announced today that we're acquiring are primarily distributed in the usa. yet for our company, we distribute about 60% of all pairs of footwear outside the united states. so really for these four brands, a tremendous international opportunity. >> within the collective brand staple, which of the brands was the most important to you? which one did you really want to get your hands on? >> well, as folks that love brands and love to distribute brands around the world, we like them all. but you have to be impressed with sperry topciders. sperry topsiders right now is white hot. over 90% of its business is in the united states. international markets are almost untapped. it's a brand that's geared as much or more to women than men. in addition you have to look at the saucony brand.
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a true heritage running brand. with strong product in minimalist and barefoot. >> thank you for joins us today, blake. coming up next on "street signs," the bond king weighs in. bill gross is going to tell us where he's hunting for you in this market. is our number one pick in the 2012 stock draft ready to mount the mother of all comebacks with blackberry 10? a great debate when "street signs" comes back. ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550
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do check out cobra. d.r. horton. big pop for the home builders. both stocks up 50% over the last six months. brian sullivan is out in l.a. at the milken conference. what's the bus zz on day two? >> specifically the u.s. economy and the deficit. how do we fix that? we've talked a lot about the fed. we've talked a lot about the low interest rate policy. really the answers come down to two things. number one, the deficit still remains huge at more than $1 trillion for the next couple of years. two, have we reached the limits of what low rates can do to help us because we need growth to solve some of the problems. it's not just going to be about cost cutting. yes, we can cut some costs. the reality, though, is that we're going to need, at least according to the guess here, 3% plus growth for a number of years to make any significant
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dent in the deficit to get the fiscal track back in order. the question is, how do we do that? there's a lot of different views certainly on that. i'm sure our next guest will have some views on that as well. >> absolutely. let's bring in our next guest. of course, we have pimco's bill gross joining us with his latest investment outlook. great to have you on once again. >> thank you, mandy. >> before we get to some of those very meaty questions, i want to get your reaction to what atlanta fed president dennis lockhart said earlier today about the prospects for more qe. >> i think there's only so much we can do to stimulate loan demand and to -- to change the risk appetite of the financial system or banks. so i'm not sure at this moment that more stimulus would -- at least more really active stimulus in the form of quantitative easing, for example, would have that big an effect. >> so, bill, to brian's point, has the fed basically hit the limit in terms of what it can achieve now?
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>> well, they're beginning to hit the limit, certainly. i mean, mr. lockhart has a point. in terms of the effectiveness of qe, i would simply point out that when qe-1 and qe-2 ended, over the past year and a half to two years, that the stock market went down by 10% to 15%. so it seems that credit markets for one reason or another, you know, seem to require a constant and consistent input in terms of monetary ease. and that has been the quantitative easing aspect over the past three years. >> do you feel, then, the fed is essentially painting itself into a corner here? i want to bring up something another friend of cnb nrkcnbc s earlier today. the market doesn't want goldilocks. do you agree with that? >> i think to a certain extent
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toy. the fed is looking to stimulate the company to a 5% nominal gdp growth rate. that speaks to 2.5% to 3% real growth and perhaps 2% inflation. what did we see, you know, earlier this week? we saw about 3.8%. to the fed's way of thinking we're a little bit too cold. at some point, you know, according to my view, at some point perhaps not at the end of june, we're going to need another shot of adrenaline in the form of quantitative easing. >> bill, you know, how much does the fed really matter to everyday americans? if i'm an overleveraged family in ohio trying to make ends meet, middle class, whatever, why do i care about the federal reserve? >> to some extent, brian, you care to the extent of what you're earning on your savings deposits and your money market funds. there are, you know, trillions of dollars worth of deposits by middle america that are only earning 25 basis points. and in the case of money market funds, only .01% on their money
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market funds. yeah, they've been hurt badly. they will continue to be hurt in terms of the savings function going forward. the stimulation in terms of the economy and the job creation may not be what they want. but certainly they're being robbed, so to speak, of their ability to stay even with inflation by these negative real interest rates. >> that's right, right? you've got to have money to have a money market fund. we often forget that really one of the two mandates of the federal reserve is job creation. got a huge number coming out friday. goldman says maybe over 100,000 jobs created. that's not enough to get growth going. why haven't fed policies stimulated job growth more, which is really their main mandate aside from inflation? >> well, we've reached to a certain extent the end point in terms of zero bound interest rates. when we get close to zero, we find negative aspects of zero bound interest rates start to come into consequence.
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for instance, we see certain business models, you know, whether they're insurance companies or money market funds or banks simply laying off people because they no longer can earn a profit based upon these low yields. the fed has always operated on the basis of lower interest rates produce stronger growth. at some point, and currently at this point, we're seeing that's not necessarily the case. >> in light of these low yields then, bill, where do we get high yields? where are you putting your money? >> the bond market, mandy, in terms of investment grade only yields 2%. let's start from that point going forward. so if an investor wants more than 2%, requires 3%, 4%, 5% for that 401(k) or college education or for retirement, then they have to stretch it a little bit. we're not recommending that they stretch it in terms of credit quality. we're suggesting that they buy, yes, agency mortgages that yield 3% to 3.5. and that they certainly look towards inflation protection. you know, i think that's key. i think what we've seen, you
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know, over the past several years in terms of qe has been very inflation producing ultimately down the road. so an investor should look to the tips market, certainly, to protect their purchasing power going forward. at the moment, those tips securities protect inflation to the extent of 2.2% going forward and they provide on longer maturities a real rate of interest as well. tips plus mortgages will get you, you know, 3% to 4% is not great, but it's better than 2%. >> bill, at current growth rates does the u.s. deserve another credit rating downgrade? >> oh, i think ultimately they will. you know, let's look to the liability structure of the united states. it's not just $15 trillion in terms of current debt, but it's probably three to four times that in terms of medicare and medicaid and social security. in terms of the present value. unless the united states begin to make some inroads, that's called the structural deficit that the cbo and the imf
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basically identified as, perhaps, 6% to 7% to 8% greater than any other country other than japan and the united kingdom. until we address that structural deficit, yes, we're headed to that territory. >> on that, what credit rating would you give the united states right now? >> right now an aa plus. i'd be conscious of november and december and the fiscal cliff, how we begin to attempt to fix our situation. >> considering how much the treasury market shrugged off the last downgrade, whether or not the market would care about another one. bill, we have to leave it there, unfortunately. we'll have you back. brian, we'll check back in with you as well in a few minutes time live from milken. live from "street signs," the best month ever for one automaker. the battle of the bulging pump. how the obesity crisis is forcing every one of us to shell out more at the gas station. street signs is back after the
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let's get back to the head of the class. let's solve this. pep boys not so peppy. in fact, they're being pummeled. ticker pby down 25% on really disappointing earnings. the auto parts retailer is in the process of trying to go
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private. still in the sector, the best april for chrysler in four years. a heck of the a month for the folks of vw. also news hyundai of south koor rae ya is going to be working round the clock literally to keep up with demand. are auto sales tells us a different story? jessica coldwell and phil lebeau. jessica, thank you very much for joining us. i want to talk about chrysler first of all which had essentially the best april in four years. sales are moving up. incentives are moving down. how did they achieve this? >> it's an interesting question i think a lot of people have been asking themselves. that's the ideal mix. sales up. incentives down. the interesting thing is if you pull back the layers, one thing i've noticed looking at their finance rates, they have a big percentage of their finance buyers for chrysler and dodge that are technically in that subprime category. people that are financing their cars for over 10%. that opens you up to a big
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portion of the market. a part of the market a lot of automakers aren't coveting. if you open yourself up to that you have a lot more customers. that's really helping drive their sales. >> you say the other automakers aren't coveting the subprime space yet. is there a possibility they're going to see it's working for chrysler and move in as well? >> i think so. that's definitely something automakers have flirted with before. it's worked with mixed degree. chrysler is not the only one in that space. you see high numbers from kia, suzuki. i think the marketing is opening up to those type of buyers. if you look at credit scores of buyers, it's falling. there's definitely indication the market is moving that way. especially when you look at the aggregate number for the subprime market. it is increasing. >> to what extent -- auto makers don't need to offer incentives? >> you don't want to have to offer more money for somebody to come in and buy a vehicle. keep this in mind. we track this month to month. jessica knows about this.
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we've talked about this a couple of times. yes, we have seen them trending lower. the problem is, all it takes are a few automakers, we saw honda and toyota both ratchet up their incentives last month. not dramatically. all it takes is a few of them to say things are slowing down a bit. let's start pushing it. once that happens then you're going to start to see things trend the other way. >> jessica and phil, thank you very much for joining us. behind the wheel of those new cars, heavier drivers. if americans still tip the scales at the same weight on average as they did in 1960, we would save about 1 billion gallons of gas every single year. it takes more gas to move more weight, essentially. roughly $3.80 a gallon today, that's nearly 4 billion bucks wasted on our bulging waistlines. coming up, will the sunshine on rim again? coming up, making the bull case for the blackberry maker. plus, there's a whole lot of money spent on preworkout supplements. is the market about to crash?
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welcome back to "street signs."
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let's get back to street talk. let's start off with the markets. we've got four stealth stocks on the move. by stealth we mean stocks flying high under the radar. all of them hitting new highs. first up, ticker mdso. that company helps pharmaceutical companies manage clinical trials. then you've got cartronics. the world east largest nonbank atm operator. up about 10% today. 3d systems. ticker ddd. up about 6%. bank of hawaii. ticker boh up nearly 2% to a new high as well. as for oil, well, it's powering through $106 a barrel. the final energy trades are happening now. sharon? >> oil prices have been trading for the last four or five weeks in the same range. between $100 and $105 a barrel. traders behind me getting pretty bored by that kind of action.
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today we saw the breakout. we did hit a high approaching the next key level traders are looking at. 106.75 an ounce. it was the ism data that really spurred prices higher here. in fact, it looks like perhaps the economy is improving. we also saw the spread between brent and wti come in a little bit. in terms of gasoline prices were lower. we are seeing, of course, the delta conoco deal, buying that train of refinery, putting pressure on gasoline futures. that's good news for prices at the pump. the other standout continues to be, believe it or not, natural gus. up about 45 cents from the lows we saw in early april below $2. now production data from the energy department shows in february it was at a four-month low. we're going to get a storage report that's likely to show a smaller injection than what we may normally see this time of year. all of that could continue to prepel natural gas prices higher. that's higher still in this $2 range. back to you. >> thank you so much for that. let's get back out to brian
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at the milken conference. >> we're going to continue our discussion about fiscal policy, mandy. we're joined by scott miner, friend of the show well known to our viewers. ceo of guggenheim partner. we had bill gross on a few minutes ago. i asked him if he thought the u.s. deserved another credit rating downgrade if we continue on our current path. he said we did. do you agree? >> no, i don't. i think there is no credit risk in u.s. treasuries as long as we have a printing press, brian. ratings are supposed to reflect the contractual ability to pay principal and interest on a timely basis. there's no doubt we'll be able to run the printing press and pay our debts if we have to. >> running the printing press then has its own risks. >> that's right. >> such as? >> such as inflation at the end. right? i think that is a huge challenge. i was just on a panel here with president evans. >> moderated by steve liesman. >> moderated by steve liesman.
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and dennis lockhart. the whole discussion was about exiting qe. one, do we need more qe? two, can we exit qe before the inflation problem takes off? it was a rather lively debate. >> what was the conclusion? >> there was a di vvergence of opinions on the panel. >> there's a divergence of opinions on the fed board. >> yes, there are. you have some like charlie evans who believes that a 3% rate of inflation should be tolerated. dennis lockhart things 2% is too much. personally i believe that the fed should stop thinking about inflation as the con kwens of monetary policy and view it as a policy tool. because the only way the united states is ever going to adjust its debt to gdp ratio is to allow there to be a slow gradual inflation. and because they don't recognize it as a tool, it's likely to get out of control. because they're not managing it. >> low rates forever has not
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worked in japan. >> it hasn't. >> japan is not a model of growth. >> right. >> it also doesn't have much of an inflation problem. >> right. >> what can we learn from japan's mistakes? some suggest we're the next japan. >> the big tiff rens between us and japan is the fact we've allowed our currency to depreciate. by having a weaker dollar, the united states has become the manufacturing center of choice in the world. we're having the largest manufacturing boom since the 1940s. we have more hours worked in manufacturing than since 1945. manufacturing is really strong thing here. that's helping us. >> you're known as a bond guy but you're increasingly an equities guy. you've grown out your etf business as well. stock mart as done pretty well. what's your view? are we going to hit new record highs on the dow any time soon? >> i think so. i think we'll see a new high before we have some sort of consolidation over the summer. we could get a 6% to 10% pullback during the course of the summer which i would see as a buying opportunity. i think as long as we stay in this accommodative mode,
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equities and high yield are the place to be. >> by the milken conference next year, one year from today, will we be at dow 15,000? >> boy, that's a good question. i'll say yes. >> you'll say yes. >> i'll say yes. >> you don't sound like you're 100% there. >> you know, we've had such a great run. you know, i've been so bullish on equities for the last six months. >> you've been right. you're getting a little less bullish on equities. >> markets don't move in a straight line. i'm definitely of the mindset that we are in a long-term bull market. i think we're going to go back to the 2007 highs. but, you know, i think given all the noise in europe and the fact we've moved so far, so fast that we probably need to do some consolidation. >> by the way, dodger deal closing. nice dodger blue tie. >> thank you, brian. >> mandy, scott and i with charting. i saw you do bank of hawaii. we just came to the conclusion that you and your family had so much spam that you single
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handedly lifted the entire hawaiian economy to the point where the bank of hawaii knows it will benefit through a low spam rate policy. >> coconut oil. pineapple. spam. and hula skirts. i also think i probably single handedly supported the ukelele economy as well. i want to ask you. we ask all of our guests here on cnbc, what is the bottom line? i'm going to ask you to bottom line it at milken. what's the feeling in terms of more bullish, more bearish? >> bottom line, people are like scott cautiously optimistic. but i can tell you this much. this is my tenth straight milken conference. the last few years have been very difficult. it was very difficult to find people that were bullish. especially if you took out the fed's actions. i would say in the last five years, this is the most optimistic that the people here have been. they're not wildly optimistic. nobody's running around in the streets throwing money in the air. i guess like ten years ago. but at the same point, there is a feeling of optimism.
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a lot of concern about europe. i know our viewers sometimes, you and i hammer europe. people say stop talking about europe. nobody cares. the people here running collectively about a ga zillion dollars, they do care about europe. cautiously optimistic. watch spain. watch europe. that is the bottom line. that's the bottom of the spam can. >> we've got to coin a new phrase. somewhere between cautiously optimistic and wildly optimistic. maybe people can tweet in and give us their thoughts. >> next year i'll be streaking like i did a few years ago. this year it's not appropriate. >> always appropriate if it boosts ratings. thanks, brian. news alert. the ceo of twitter speaking at the wyatt business conference. julia boorstin is there in new york city. >> mandy, twitter ceo addressed the concern that twitter isn't as profitable as it is popular. but he said he appreciated everyone's concern for the business. but, in fact, it's working fe no, ma' phenomenally well. that is a direct quote.
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he said he doesn't think there's any need or urgency to think about an i prk o. a lot of ipo talk as we head into facebook's ipo expected later this month. he says the company is growing on its own organically and has plenty of money in the bank from the private financing they did last year. the ipo market is not something he worries or thinks about. what about this idea that we're in an ipo window that is open now and might close? he said that thinking that there's limited ipo window is shortsighted. and that if you have a great business, you'll be able to go public whenever the time is right. as to the question whether there's internet bubble, costello says he doesn't know and he doesn't care. whether or not there's an internet bubble is not something that affects his everyday thinking. what he is focused on is growing the business and sticking to the business of tweets, promoted tweets, he says, they are confident they have a hit on their hands. >> i love that. doesn't know and doesn't care. julia boorstin, thank you very much for the reporting. again, guys, we have a rally on our hands. dow is at a four-year high right
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now. financials, they're the big winners on the day. names like bank of america and jpmorgan really big winners amongst the financials. coming up, is the lucrative market for preworkout supplements about to tumble? darren rovell has been doing some digging. he's got a special report. don't go away. tdd# 1-800-345-2550 the spx is on my radar.
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my name's colleen stiles, and my kids and i did our wills on legalzoom. [ shapiro ] we created legalzoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes. at legalzoom.com, we put the law on your side. the dow today as we've been telling you is sitting around a four-year high. moving to the upside by 112 points. surging on the first day of may. american express, intel, verizon and at&t all new 52-week highs right now. 26 out of the 30 industrials are moving to the upside. another great show coming up after this. let's check in with bill
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griffeth. >> you are too kind. coming up at the top of hour, worried about the bond market. is now a time to bail on treasuries? we have both sides of that issue coming up. plus, you probably already heard herbalife shares plunging after david einhorn asking probes questions. we have one analyst who says this selloff is a huge buying opportunity for investors. after the bell, former hewlett-packard chairman and ceo carly f lly fear fe-- fiorina. >> thanks a lot for that, bill. an infwregredient in a prew out supplement has caused a stir. there are hundreds of millions of dollars on the line. our darren rovell is here with a special report. hey, darren. >> yes, mandy.
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it's called dimethyl amialene. it's a popular prework out supplement. taken to pump those up working out, before working out. they are sold by publicly traded companies like gnc and vitamin shoppe. those stores are legally selling these products. the fda has called into question whether they deserve to be on the market. on friday the fda sent letters to ten manufacturers of dmaa brands stating it is of the government organization's belief that dmaa does not qualify as a dietary supplement because it is not derived from a plant, mineral or herb and did not appear in the food supply prior to 1994. as a drug, dmaa would have to be approved by the fda before it hit shelves. manufacturers of dmaa brands that have been on the shelves for years say the ingreend yent actually does have its roots in the geranium plant.
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authorities have focused on this technicality more in the past couple months after two army deaths. before an ongoing investigation commenced, the military took 18 dmaa products out of gnc stores on military bases. for its part, gnc says it will continue selling the products with dmaa in it. senior vice president and chief legal officer for gnc said in a statement, we have pursued and have not been able to find any evidence that dmaa is a safety issue. consumer safety is paramount to gnc and we would not be selling this product if we had any indication it was unsafe. after falling by 4.7% yesterday, as you can see, gnc has bounced back today. perhaps based on a note by jpmorgan which reiterated that dmaa products make up a low sij it, single digit percent of
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gnc's total revenues. for more on the story check out our investigation on cnbc.com shortly. >> i'm going to speak on behalf of the people who might be watching and are saying, goodness, i take a product that's got that ingredient in it. what's the next step? >> gnc is standing by this. they're still keeping it on the shelves which should mean something to people. though i did speak to the fda. and there would be steps. if these companies -- the burden is now on them. if they do not come within the next now 12 days to the fda and they do not tell them that it is, in fact, not a drug, this could be pulled off the market. the work could be done for them. >> great reporting, darren. thank you very much for bringing that to us. coming up on "street signs," can blackberry 10 save research in motion? we're going to debate that and whether or not josh brown's rim pick in the cnbc's stock draft was a bold call or just wishful thinking. with the spark miles card from capital one,
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first pick from josh, congrats for the first pick. >> thank you very much. >> who is your first pick? >> i'm here to announce i'm taking my pick to ontario,
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canada. r.i.m.m. is who i pick. >> the blackberry is down another 4% and off 70% in the past two weeks. research in motion announced the 310 platform to developer. it's a very big reveal for the company but can it save r.i.m.m.? a hold on the stock and a new face to cnbc, northern securities, and he says sell. mark, i'm going to get to you first of all because i believe you upped your price target from 12 bucks to 13. why? >> right. i took my target up a dollar. i'm still hold rated so i'm not going to get into a big argument about whether you need to go out and buy the stock. they did something strategically important. they are going to open up their blackberry platform to the full services of blackberry. i think they are going to make it available on androids and apple in a year's time.
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>> is there any incentive to create for r.i.m.m.? >> well, you get some really good e-mail service connectivity with the blackberry. the services people like. it's just the phones are terrible and the ecosystem is terrible. they have an install base of close to 70 million subscribers paying $5 a month to have access to the instant access. if they open that up, almost like if you can't beat them, join them, they might have a chance of saving subscribers and retain that revenue stream. >> sunny, is there anything that mark just said that would change your sell rating? >> no. we haven't seen anything today and we don't expect to hear anything over the next 12 to 14 months. the core business as your other guest was alluding to, we see those margins
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>> but hang where does it go? what's the end game for m.r.i r.i.m.m.? >> there are a lot of positives at r.i. mrk m. but on a combined basis the negatives outweigh the positives. they should have opened up the platform before. everything is hinging on this blackberry and new o.s. people are expecting today to have a big launch dalt date. that hasn't happened. you are saying to do an app for us but by the way we don't have a release date. that's not the way that the tech world works, especially when you're a laggard and behind everyone else on the planet. >> mark, real quick, what do you think is the end game for this
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company? >> i think there is a salvage for it. the patents do have some value. i'm not sure if they will be able to turn that knock around, the blackberry platform. we are looking through a valley. so the end game is either a sale to somebody who buys them for their patents or a long shot that they actually get it right and open up that blackberry platform and turn it into an enterprise software play. >> okay. time will tell. thank you very much for joining us. i should say that we're going to be live at the blackberry world conference tomorrow and our very own brian shactman will be out there. he's going to be all overall thing blackberry. coming up next, is stainless steel about to go the way of the green fridges and orange countertops? as we head to the break, we have a nice rally on our hands with stocks sitting at four-year highs. in the meantime, breaking news from darren rovell. what have you got? >> we got the report from the dmaa which sent letters to
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organizations that make that supplement being sold at gnc and vitamin shop and amazon.com is in the process of telling us that they are pulling products that contain dmaa. they have ten products that are on their website and, again, they are in the process of pulling those. amazon.com sent a warning letters to consumers in the u.s. after health canada banned dmaa in july of last year. and now it looks like ahead of the fda action, if there will be any action, am azon.com is pulling products containing dmaa. >> we can see the d and c holdings is sitting around 8% but the market is trying it to
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digest what this means for them. we're dropping a little bit but there's a lot of action going on there as we speak. we'll keep on following that story. darren, we'll be back after the break. in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you? because for 200 years, we've been helping ideas move from ambition to achievement. and the next great idea could be yours. ♪ and the next great idea could be yours. greetings from the people here sure are friendly but some have had a hard time understanding my accent. so to make sure people get every word of the geico savings message i've been practicing how to talk like a true chicagoan. switching to geico could save you hundreds of dollars on car insurance... da bears. haha... you people sure do talk funny. geico®.
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i have to show you gnc holdings. gnc is to the downside by 1.3%. we'll have to see what happens, whether they als

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